Hurricane Harvey: Worker shortage slows rebuilding after storms

Shirley lost a lot after hurricane Harvey ravaged Texas, but a set of cups from her mother was the most sentimental loss. A stranger who lives thousands of miles away set out to make Shirley's recovery a little better.
Humankind

Recent megastorms have flooded large swaths of the Southern U.S.(Photo: Getty Images)

Contractors told Mindy Gronauer that repairs on her four-bedroom Houston house – whose main floor was destroyed by flooding from Hurricane Harvey – should be completed in about four months.

"That's not going to happen," says the 64-year-old retiree. She figures it will take more like a year, noting that all 159 homes in her neighborhood sustained similar damage and worker crews are scarce.

Gronauer, while grateful to be staying with her daughter's family in the meantime, still finds the whole situation very unsettling.

"I used to have what I want and need,” she says. “I miss everything.” Most disconcerting, she says, is not knowing when she can return to her home. “It’s the uncertainty … I have to live with it.”

A construction worker shortage is slowing rebuilding efforts in Texas and Florida, which got underway a few weeks ago after many houses dried out and many claims for insurance and government assistance were filed. Builders and their trade groups say it likely will be several years before all the repairs are done.

“There was a significant labor shortage in the construction sector before the hurricanes,” says Jerry Howard, CEO of the National Association of Home Builders (NAHB). The storms, he adds, compounded the crunch. “This will leave people in a very tough position for a much longer time.”

Although rebuilding began in Texas and Florida last month, the Labor Department recently said the construction industry added just 11,000 jobs in October, below its average monthly pace of 14,700 so far this year. The limited hiring partly reflects worker shortages, says NAHB Chief Economist Robert Dietz.

Hurricane Harvey hit Texas in late August and Irma lashed Florida in early September. About 135,000 homes out of about 2.4 million in the Houston area were damaged or destroyed, according to the Greater Houston Builders Association and the Texas Association of Builders. In regions that were affected across the state of Texas, as many as 1 million houses out of 2.8 million suffered at least some damage.

Not all of them will be restored. The vast majority were not covered by flood insurance, and some people who can’t afford the repairs will simply walk away, says Don Klein, incoming president of the Houston builders group.

In Florida, insurance or government assistance claims have been filed for some 800,000 structures, 75% of which are residential, says Greg Matovina, incoming president of the Florida Home Builders Association. While much of the damage in Texas was flood-related, wind was a chief culprit in many parts of Florida.

The repairs come on top of a pickup in housing construction in two of the nation’s largest states and hottest home-building markets. Permits for new single-family homes are up 7% so far this year in Texas, in line with the national average, and 12% in Florida, NAHB says.

Workers are far less prevalent. During and after the housing crash, the number of U.S. residential construction jobs plunged by 1.5 million, and only about half have come back, NAHB says. Many workers left the industry for oil, trucking and manufacturing jobs, says Ken Simonson, chief economist of Associated General Contractors, a trade group. During the downturn, the construction labor force plunged by 25% to 8.9 million people. Despite the partial rebound, the labor force in 2016 was still 1.6 million workers short of the 2007 peak of 11.9 million, Labor figures show.

Part of the problem is that thousands of Baby Boomer construction workers are retiring each year. And few young people are taking their spots, which can pay upwards of $20 an hour, opting instead for a college education and less physically demanding jobs.

At the same time, the Trump Administration’s crackdown on illegal immigrants is reducing the number of foreign workers available. Nearly 30% of construction trade workers were foreign-born in 2015, according to NAHB, but the share was higher in states like Texas and Florida.

“A large percentage of (foreign workers) have decided not to come or have gone back (to their countries) because they are afraid,” says Matovina, of the Florida builders group.

In an NAHB/Wells Fargo survey in July, about 65% of home builders reported labor shortages, up from about 60% a year earlier. The additional squeeze following the hurricanes has pushed up construction wages by an average of more than 30% in Texas and about 25% in Florida, the states’ builders groups say.

Contractors in both states must wait for subcontractors in sheet rock, insulation, cabinets and other specialties to arrive from other job sites. Once they do, projects often take longer than normal because crews are thin. Many workers are job-hopping for higher pay.

Dan Bawden, head of Legal Eagle Contractors in Houston, says average repair jobs he would typically complete in six to eight months could take more than a year because of the volume of jobs and the worker deficit. “It’s going to go nuts,” he says.

Joel Dantzler, head of the Dantzler Group, a remodeling company in Jacksonville, Fla., has a backlog of 50 projects instead of his normal 10 or so. He says it will take about two months just to start a job, up from a typical two to three weeks. Building officials in both Texas and Florida say working through their entire backlogs could take two to five years.

Some construction workers have trickled into Texas from other states, building officials say, drawn by the higher pay and steady work. But the numbers are limited because of existing worker shortages across the country. And Florida’s Matovina says state law bars workers who aren’t employees of a licensed Florida contractor.

Here’s how some builders are coping with the worker shortages:

• Factory style. Jeff Hunt, head of Heritage Construction, in Houston, is setting up construction assembly lines — lining up eight or nine jobs in the same neighborhood so subcontracting crews can jump from one house to the next. That way, he hopes to avoid losing crews during downtime. “My objective is to feed the machine,” he says.

• Be less picky. Unable to hire a project manager, Hunt used social media to find a 50-something purchasing and logistics manager in Nevada who wants to return to Houston and is willing to be trained. “This isn’t brain surgery,” Hunt says.

• Widen pipeline. The Houston builders group is working with local high schools and community colleges to turn out more students from their construction programs. But that takes time, says group CEO Casey Morgan. The Home Builders Institute, the industry’s training arm, plans to offer compressed 12-week classes in the area next year.

• Networking. The Texas builders group is developing an app to connect contractors with workers in other states.

• Former workers. The Florida builders group is funding the hiring of recruiters at local chapters who will try to lure former construction workers back to the industry.

Gronauer, the Houston homeowner, isn’t banking on a speedier construction timetable. ”I’m just changing my attitude,” she says. “I just have to breathe.”

CLOSE

Houston Texans star J.J. Watt announced the plans for his Hurricane Harvey Relief Fund after raising more than $37 million to assist those in Southeast Texas.
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